Watch Out! Top 10 Home Buying Mistakes to Avoid
Are you ready…get set…let’s go buy a house!
But wait, not so fast…there’s more to buying a house than just the pure excitement of it all.
There is a right way and a wrong way to go about buying a home and if you don’t know what you’re doing, it could cost you more than just money, it could cost you your life (we’ll talk about that in a moment).
Before you go all gung-ho and rush into something you might regret, please stop and take a few minutes to learn some home buying basics. Pay particular attention to what you should do and what you shouldn’t do when looking for a new home. Then make an effort to learn the most common home buying mistakes people make and how to avoid them. A little research can go a long way when it comes to educating yourself. Well-researched information is what you need to make an informed decision about how to flawlessly buy your new home.
OK? OK! Let’s get started.
What’s the Big Deal Anyway?
Well, buying a home for most people is likely to be one of the largest financial transactions they will ever make. Get it wrong and it could cause you to pay too much or get into a house that will eat you alive. But if you get it right, you will be rewarded with the peace and serenity of having a home you love and cherish. A place where you can raise your family and make memories that will last a lifetime.
Yep! That’s the big deal.
The Top 10 Home Buying Mistakes to Avoid
1. Not Doing Your Financial Homework
Before you get ready to buy a home, you need to sit down and take a close look at your finances and assess your income, expenses, and savings. Next, you should determine how much you can truly afford to pay for your new home without stretching yourself too thin. Then you will need to look at and clean up your credit report if there are mistakes or if your credit score is too low.
Once that’s all taken care of, you will need to make sure you have enough money to put down on your new home. And if you don’t have enough, develop a savings plan and timeframe that will get you there.
Mortgage companies have bunches of strict rules when it comes to where you got the cash for your down payment, so borrowing it, using your credit card, etc. are not an option.
2. Not Thoroughly Researching the Location and the Surrounding Area
Thoroughly researching the area where you might be calling home is just as important as researching the home itself.
- How quickly can you get to work, schools, daycares, and your other daily activities?
- Is the traffic in the area so dense that it will add too much time to your daily commute?
- Are the things you use most like the grocery store, gas station, dry cleaners, bank, daycare center, etc. nearby or do you have to drive a distance to get to them?
- Does the area look stable and growing or like it’s headed in the wrong direction?
- Do the area homeowners take pride in their home and property or does it look like no one cares?
- Are natural disasters frequent in that location? Think floods, hurricanes, tornadoes, etc.
We could literally go on and on, but you get the picture.
3. Not Properly Vetting Your New Home Before Committing to It
This one is a biggie because rarely do home buyers take the time to thoroughly research a home before they commit to it. They see it, like it, then buy it. But there is so much research that needs to be done before you make any final decisions.
➣ What are the property taxes going to be per month and year?
Once you know the property taxes, you will then you need to remember that if the value of the house goes up each year, then so do your annual property taxes. So if you can barely afford the current mortgage, how are you going to pay it if the property taxes go up? You need to pay close attention to this issue, especially if you are buying a new construction home because these home values typically go up significantly within the first five years or so.
➣ Is the house in a flood zone?
If it is, you are going to have to pay for flood insurance and even if it’s not, flood insurance is still a good idea. In addition, if the area floods several times over a short period, your flood insurance could skyrocket. Could you afford to pay it if it does? You can use the FEMA Flood Zone Map to see if the house is in a flood zone. Then you can calculate the flood insurance rates by using a Flood Zone Insurance Calculator.
➣ Have you checked for natural disasters, environmental hazards, and/or sinkholes for that house and the surrounding area?
You can check for all these issues using a site called PlotScan.com. You just input the address and it will tell you everything you need to know about the surrounding area. This tool is exceptional and extremely helpful in assessing any given area.
➣ How is the crime in that area?
Sometimes, at first glance, that location might look like a good area, but surprise—it’s riddled with crime. You can easily monitor crime stats within a five-mile radius of any address using a website called SpotCrime.com.
➣ What are the school ratings in the area?
If you have kids who will be attending school in the area, take a moment to check the ratings for those schools. You can check the ratings of area schools on a website called Neighborhood Scout.com.
➣ What are the future building plans for the area?
It’s important to check with the city planning board to find out their plans for future building and improvements. Why? Because it would not be good if you bought a great house that backed up to a beautiful, peaceful wooded area that you enjoyed every morning while drinking your coffee, then a few years later they build a big box store there. Unfortunately, that big box store is your new view as it is now backing up to your property! Or, if that new super-highway will be built on the road in front of your house. Any such event could cause your property values to plummet, not to mention the noise and inconvenience it would cause.
4. Not Fully Understanding the Costs of Buying a Home
The cost you and the seller agree upon is not the only cost associated with buying a new home. There are a wide variety of closing costs, inspections, insurance, etc. And you need to know and thoroughly understand everything that’s involved so you are fully prepared for what’s coming. This is where your real estate agent will be a huge help to you and will make sure you are on the right track, so don’t hesitate to ask questions.
5. Not Being Preapproved Before Shopping for a Home
Being prequalified and being pre-approved are not the same thing. If you find a home you don’t want to lose, or one that you desperately want a seller to accept your offer, you should provide a copy of your pre-approval letter with the contract. If a seller is presented with several offers for that home, they will almost always go with someone who is preapproved versus someone who isn’t and whose mortgage loan might be denied. So a preapproval letter could mean the difference between being awarded that home or it being ripped out from under you— and no one wants that.
6. Not Keeping Your Emotions in Check
Keeping your emotions in check is one of the best ways to keep it real and make sure you stay within your budget. Finding a house you absolutely love then realizing either you can’t afford it, it has some deal-breaking flaws, or anything else that would cause you to have to walk away isn’t the end of the world. Just realize that ahead of time so you don’t let your emotions rule your wallet. Because if you do, the next thing you know, you are living in a house that makes you miserable because you are always struggling to make the payments. Or, that the home’s flaws are costing you big or making you want to move…again. Remember…there will always be another house—guaranteed!
7. Not Having an Emergency Maintenance and Repair Fund
Imagine this…you just bought what seemed like the perfect house. You love everything about it, it passed the home inspection with flying colors, then—wham—a major repair needs to be done. Or, perhaps a bunch of small things keep breaking and need to be fixed or the appliances seem to be going out one after the other. It happens…all the time!
If you spent all your savings on the down payment and other closing costs, you won’t have the money you need to make those repairs. Yes, you could finance those repairs, but if you can barely make the mortgage payments, that could be problematic and you don’t want that. So make sure you have enough money saved for a maintenance and repair fund before you buy a new home.
8. Not Asking the Seller to Provide a Home Warranty
It’s common for a seller to provide a home warranty (usually for a year) to potential buyers. Home warranties are fairly inexpensive and give both the buyer and the seller peace of mind because a home warranty will cover things that might go wrong while the seller is trying to sell their home as well as coverage to a buyer after the sale. So if the seller isn’t offering a home warranty, ask your real estate agent about perhaps including that in the contract.
9. Not Having a Home Inspection Done
Yep! You would think this is a given. However, many people choose to skip this step to save money. Never—ever skip the home inspection and don’t use a non-professional (parent, friend, know-it-all) to perform your home inspection for you. The home inspection might just be the most important step in buying a home.
A professional home inspector could save you from making a huge home buying mistake. The home inspection could uncover potential issues that might not be readily visible. And, if that’s not enough, in Florida, a seller is not required to provide the buyer with a Home Disclosure form. They are, however, required to tell the buyer of any known defects, but what if the seller truly isn’t aware? What if there’s a sinkhole or other major issue? After you close, that home is yours and then it’s too late to walk away.
10. Not Having the Home Tested For…
Not having the home inspected and tested for termites, lead-based paint, mold, radon, or not having the well and septic tested could end up a disaster. Making sure there’s nothing in that home that could make you sick or cost you your life is of the utmost importance don’t you think? So just like the home inspection, don’t neglect to have every facet of that home thoroughly tested.
The Bottom Line
Buying a home truly is exciting and knowing that you’ve done your research and are properly prepared to buy a home confidently, now you can relax and let the process happen. The next thing you know you will be breaking open the Champaign and celebrating with friends and family in your new home. And it doesn’t get much better than that!
Other Valuable Resources for Home Buying
7 Tips for Buying an Investment Property – Danny Margagliano
Smart Things To Do After Buying A Home – Paul Sian
Does Buying A Home Require A Big Down Payment – Michelle Gibson
What is a Right of First Refusal in Real Estate – Bill Gassett
Is It Better To Rent Or Buy A Home – Sharon Paxson
If you would like more information about buying a home in a particular location and/or a list of homes in that area, please Contact Us today. We would love to help you find your perfect home. A home that you can relax and enjoy for years to come.
Lakeland Real Estate Group is a proud member of the community, and we thoughtfully serve the great people of Lakeland, FL, and all the surrounding areas.
About the author: The above real estate article “Top Home Buying Mistakes to Avoid” was written by Petra Norris of Lakeland Real Estate Group, Inc. With over 20 years of combined experience of selling or buying, we would love to share our knowledge and expertise. Petra can be reached via email at email@example.com or by phone at 863-712-4207